Today, Siemens announced that it has struck a deal with Microsoft to create a German instance of the HealthVault platform to serve the citizens of Germany. In a deal similar to the one that Microsoft struck with Canadian telecom, Telus, Siemens IT Solutions and Services (SIS) will re-purpose the base HealthVault platform to meet Germany’s legal framework for Personal Health Information (PHI) and seek German partners to create a rich ecosystem of data providers (insurers, providers) and apps/services to serve this market.
After a joint briefing with Microsoft and Siemens as well as interviews with three German software firms, SAP (one of the world’s largest enterprise software companies), ICW (healthcare IT infrastructure & PHR solutions) and careon (case/disease mgmt & PHR solutions), here is the scoop:
The Skinny:
Siemens SIS is 35,000 employees strong operating in 40 countries. Siemens SIS serves a wide range of industries, from manufacturing, to finance and of course healthcare, which is one of its smaller markets, albeit showing strong growth. In addition to a deep presence in Germany, Siemens SIS provides services to number of other countries’ national healthcare programs – leading one to conclude that Germany may be just the first foray/country that this partnership will seek to serve.
This is an exclusive license between Microsoft and Siemens to serve the German market and both companies stated that this is a very long-term contract as it will takes years to develop, deploy and gain traction. Terms of agreement were not disclosed, but both companies will share in revenue generated.
Target market/business model is to sell the HealthVault service to potential sponsors that have a desire to improve care and disease management. Likely candidates include payers and employers. Hospitals are also a potential target market.
Service will go live in second half of 2010 and include the entire HealthVault platform, including Connection Center for biometric devices. Existing HealthVault ecosystem partners with solutions pertinent to the German market will be included and Siemens is currently in discussions with many eHealth companies in Germany to on-board them as well upon formal launch of the platform later this year.
Agreement does not include Siemens’ healthcare software business (e.g. Soarian) or medical device (e.g., imaging systems). This may come later, but nothing appears to be on the roadmap today.
This deal/opportunity is being driven by many of the same market changes occurring elsewhere (e.g., aging population, rising healthcare costs, etc.), and the migration from provider-centric care to consumer-centric care.
Impressions, Prospects, Challenges:
The German companies interviewed thought that Microsoft made a savvy move in partnering with Siemens as Siemens is a well-known and trusted brand in the German market, whereas they reported that there is some public distrust of the Microsoft. Siemens, with its extensive experience in the German healthcare market, one interviewee put Siemens’ HIT market share at 33% of German hospital market, is also well-versed in the strict and highly regulated PHI privacy laws, which will assist in the creation of a secure, regulatory compliant platform to serve this market. Siemens also has a reputation to uphold and will be quite cautious in insuring the privacy and security of citizens’ PHI.
The deal also comes at a time of much turmoil in the German healthcare sector, particularly at the highest levels of government with the recent appointment of a new Health Minister, Philipp Rosler, who in one of his first acts, placed a moratorium on the German roll-out of eHealth cards and the entire “Connector” program upon which these healthcards were to be based. Siemens, a one-time participant in the Connector program announced it would withdraw from the Connector program in September 2009 (note: Siemens started talking to Microsoft one month prior to pulling out of Connector – coincidence? Unlikely.).
According to those interviewed in Germany, the Connector program, despite enormous sums spent (estimates put it at ~$2.25B) was doomed from the start as it was “politically not doable” due to its top-down strategy (sounds like the US’s own NHIN), inability to move rapidly in response to market changes and extreme reluctance of physicians to support open transparency and exchange of patient records across Connector. Similar to the US and the challenges RHIOs face, German physicians fear data liquidity of PHI may lead to loss of control of the relationship (he/she who owns the data, owns the relationship) and subsequently, potential loss of business. Physicians reportedly also did not want to be burdened with the cost of card readers and on-ramping to Connector
In Germany, all citizens have a right to obtain copies of their medical records and most payers provide incentives to physicians to encourage them to provide records to their patients. In practice, however, the German software companies Chilmark interviewed universally stated that most consumers do not bother asking for their records and due to the aforementioned issues/concerns regarding transparency, few physicians encourage it. Therefore, Germany also shares with the US a PHR market today that is very immature and requiring a significant amount of consumer education and physician adoption/engagement. Siemens has a long road ahead.
Another challenge is Siemens’ lackluster track record in the consumer market. Sure, they have made forays into consumer goods (e.g., phones) but by and large, this is a B2B company, not a B2C. Granted, the intent of Siemens is to “sell” the HealthVault platform and its services to payers, employers and providers (a B2B model), but Siemens will need to think like a consumer to insure that this HealthVault instance serves the need(s) of the average German or risk failure.
Microsoft may also find Siemens difficult to work with as this is a very large, complex organization with a myriad of interests in countless markets. For example, SAP and Siemens spent tens of millions of Euros on a failed effort to more closely integrate the Siemens Soarian platform to SAP’s ERP platform via SAP’s Web Services platform, NetWeaver. Will Microsoft run into a similar problem? There is always that chance, though in this case less likely as this is not about tying two disparate systems and data architectures together, but more about providing an open platform (data repository) for a citizen’s PHI. In Germany, HL7, V2.x is widely used and will likely be the standard by which clinical data will be imported into HealthVault.
While SAP does not have a direct play in the consumer eHealth market, both careon and ICW do. careon and ICW welcome the announcement for they see it bringing much greater visibility to the market for consumer control of PHI and the tools to do such. In the case of ICW, which has had its own intentions to be the “platform of choice” to serve the German market (they have an extensive capability to directly import biometric data from numerous devices – directly competing with HealthVault’s Connection Center), they certainly see this as a competitive threat, but claim that much like the car rental market, consumers/businesses like having a choice and they intend to be that second option. For careon, this move by Siemens is warmly welcomed and they hope to become one of the leading ecosystem partners. Currently, careon, through its solution suite, provides case management services for some 1.2M German citizens. careon sees many opportunities to further leverage and extend their service offerings through a platform such as HealthVault.
The Wrap:
Microsoft is clearly the leader in the Personal Health Platform (PHP) market with Google Health fading into the distance. (Note: hard to compare HealthVault to Dossia as they each have very distinctive and not readily comparable operating models).
That is not to say that Microsoft is handsomely and profitably capitalizing on these initiatives. The market in the US has been extremely slow to take off, their Canadian partner Telus has yet to formally launch the Canadian instance of HealthVault, Telus Health Space and as outlined above, the roll-out in Germany will have its share of challenges. Gaining traction to support such initiatives requires patient money and it appears that to date, the head honchos at Microsoft have been willing to give Microsoft’s Health Solutions Group (HSG) a fairly long leash and the necessary resources to build-out this business.
But to be truly successful, Microsoft and its partners will need to look more closely at what consumers actually wish to do with their PHI, how they wish to interact with the healthcare system of their respective country and what are the dominant, valued services consumers seek. If one looks to success stories like Kaiser-Permanente’s MyChart, US consumers want transactional services (see their labs, make appointments, have eConsults, etc.) and today, none of these are readily supported on any of these PHPs. What other transactional services might consumers use? We’ll leave that to Microsoft and its partners to figure out as each country will have its own nuances.
And let us not forget the sponsors (payers, employers & providers) who may offer the HealthVault service to their respective constiuents. These are the target markets for Siemens and Siemens’ ability to accurately price the service and demonstrate value to a sponsor is far from a done deal. Proof points will be necessary and as we all know, proof points are extremely hard to come by in a new market/service offering requiring more an act of faith on the part of a sponsor than clear demonstrable metrics of return on investment. In tight economic times such as these where companies are risk adverse, this is a bold leap by Siemens and Chilmark will watch this roll-out carefully.
Excellent summary John. Thanks for keeping us informed about important developments in the PHR industry.
I hope this becomes available globally as soon as possible.